The accounting term which refers to whether a particular error is of such importance as to affect the decisions of an average prudent investor is called
A) Adequate disclosure
B) Materiality
C) Internal control
D) Conservatism

Question

Quizplus · Accepted Answer

Materiality is the accounting term which refers to the importance of an error in financial reporting. It is considered material if it could affect the decisions of an average prudent investor. Adequate disclosure refers to providing enough information to users to make informed decisions, internal control refers to procedures implemented to ensure accurate financial reporting, and conservatism refers to the practice of being cautious in financial reporting, often by underestimating revenues and overestimating expenses.

The Accounting Term Which Refers to Whether a Particular Error